Lemelson Patents Ruled Invalid, Unenforceable and Not Infringed

Under a decision by the US District Court in Las Vegas, machine vision and bar-code patents held by the Lemelson Medical, Education & Research Foundation LP are invalid and unenforceable. The decision by Chief Judge Philip M. Pro further declares that the products of the plaintiffs in the case -- including Cognex Corp. of Natick, Mass., and Symbol Technologies Inc. of Holtsville, N.Y. -- do not infringe on the patents.

The ruling is a blow to the foundation, which has reportedly collected $1.5 billion in licensing fees over the years from the numerous users of these technologies. Should the decision stand on appeal, lawsuits pending against hundreds of other users will be dismissed. Gerald D. Hosier, counsel for Lemelson, estimated that the lost revenues could total more than $250 million.

The manufacturers of machine vision and bar-code systems, in contrast, see the ruling as a triumph that will enable new users to adopt the technologies without fear of litigation for infringing the Lemelson patents. "The biggest winners are the users of machine vision and bar codes," said Mike Steir, vice president of corporate legal affairs at Cognex. "A couple of years from now, people may forget about what Cognex and Symbol did, but the impact on automation will be huge."

The debate

Under debate are a series of patents issued to the late Jerome "Jerry" H. Lemelson. The prolific inventor received more than 500 patents over his lifetime, the first for an improvement on the propeller beanie in 1953. His eponymous foundation holds more than 180 of his unexpired patents and pending claims, including ones that were argued to cover the technologies underlying machine vision and bar-code scanning.

In 1989, Hosier explained, the foundation began to offer licenses to the users of machine vision and bar-code-scanning systems. Over time, 979 businesses in a multitude of sectors agreed to pay the royalties. But the program, which supports charitable giving efforts, met with resistance.

"A lot of our customers were approached by the Lemelson foundation, receiving demands to pay licensing fees," said Peter Lieb, general counsel for Symbol. "We believed and our customers believed that the patents were unenforceable and that our products did not infringe, so we saw that as unfair."

In 1998, Cognex responded to a licensing push against its customers by filing suit. Ten months later, Symbol and six other manufacturers of bar-code scanning and printing equipment similarly sued the foundation together, and in March 2000, Pro consolidated the actions.

The plaintiffs argued that Jerry Lemelson was guilty of "prosecution laches" and that his patents therefore should be unenforceable. According to this doctrine, unreasonable and unexplained delays during the application process -- known as the "prosecution" of a patent -- bar the enforcement of a claim. In this case, the inventor repeatedly filed continuation and divisional applications to keep some of his patents pending for as much as 40 years.

Although Pro initially held the doctrine of prosecution laches to be unavailable as a matter of law, the US Court of Appeals for the Federal Circuit reversed that judgment and remanded the case in January 2002. Writing in the majority opinion, Chief Judge Robert Mayer held that the US Supreme Court had established the doctrine in two cases from 1923 and 1924 and had ratified it in subsequent decisions.

The ruling

Pro's current decision finds that Jerry Lemelson had delayed the issuance of his patents as he rewrote them to cover the commercial machine vision and bar-code systems that others independently developed and marketed. In effect, the judge states, the inventor used the patent system to extend his monopoly at the expense of the public and of other inventors. "If the defense of prosecution laches does not apply under the totality of circumstances presented here," Pro writes, "the court can envision very few circumstances under which it would."

Pro also ruled that the Lemelson patents are invalid and that they are not infringed by the plaintiffs' systems. He notes that a "person skilled in the art" -- in this instance, an engineer with two years of experience working with signal processing and television electronics -- could not build the systems that the inventor described in his patents, and the claims therefore are invalid by reason of "lack of enablement." Moreover, he concludes that the Lemelson patents described systems that involve objects only at a known distance, location and orientation relative to the detector and that they thus do not cover the plaintiffs' machine vision and bar-code systems.

If the decision stands on appeal -- and Hosier indicated that the foundation would appeal, pending a ruling on a motion to amend Pro's decision that it has filed -- the successful use of the prosecution laches doctrine would seem to be a significant development in intellectual property law. Although rooted in cases from 80 years ago, the doctrine was far from established as a viable infringement defense against such so-called "submarine patents," in which an inventor continues the prosecution of a patent application until a market for the invention forms.

In fact, it may be academic. Although other similar claims doubtless exist, explained John J. Cotter, a partner at Testa, Hurwitz & Thibeault LLP in Boston, the clock is ticking for most patents. Under the 1994 Uruguay Round Agreements Act, patents issued in the US have terms of 20 years from the application date. Submarine patents depended on the previous rules, under which the term of a patent was 17 years from the date of issue, enabling a skillful applicant to choose when the term should begin.

Cotter suggested that the larger lesson of the case is about principles. Other companies calculated that it was most cost-effective to pay Lemelson the royalties it requested rather than challenging its claims, but Cognex, Symbol and their co-plaintiffs decided to fight.

"This is an example of a persistent group of manufacturers who pursued what they thought was right," he said. "And they prevailed."